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How Lowering Higher Education Operational Expenses Can Lower Tuition

May 14, 2015


There is plenty of debate about why college tuitions have increased 4x faster than the consumer price index over the past 35 years, but there’s no question that it’s happened, and you’ve undoubtedly heard about it or experienced it. And if you’re like me, with kids at, or nearing college age, you’re frantically wondering what to do about it.

I’ll be forthcoming and admit that sadly, I’ve yet to figure out a sure fire path to magic full-ride scholarships or secret grants for our kids, but I do have some options that could allow the universities themselves to reduce certain operational costs and increase incremental (non-tuition) revenues. In fact, some leading institutions are already beginning to adopt these practices.

 Higher Education  Operational  Expenses Continue to Increase

Let’s face it, running a university is like running a small city, with all of a city’s food, water, power, waste, healthcare, safety, recreational and myriad other infrastructure challenges, coupled with the fact that ¼ of the population has to be replaced every year! This kind of management isn’t cheap, and perhaps not surprisingly, operational and administrative spending at schools has increased dramatically in past decades. In fact, the increase in these costs is often cited as a key driver of the overall increase in tuitions.

Fundraising Expenses Can Take  Away from Bottom Line

One specific and potentially overlooked kind of back office administrative expense that all nonprofit colleges and universities incur is related to the fundraising they do to supplement their tuition revenue. Receiving donations is fantastic, and provides a crucial incremental revenue stream, but it genuinely costs quite a bit to quickly and securely process the gifts and capture the associated data. In fact, when salaries of associated administrative staff and the overhead for mail opening, sorting, scanning and archival hardware and software are factored in, the overall cost can be a significant percentage of a given donation.

And this doesn’t take into account additional dollars that must be spent to ensure regulatory compliance, auditing and reporting accuracy and the timely delivery of gift acknowledgements and premiums.

Fundraising OperationsUse Donor Data More Effectively

Potentially even more costly, is the opportunity missed when the invaluable pieces of donor data that accompany donations by alumni and other contributors are not captured and incorporated into ongoing campaigns. We live in an age of big data, and institutions of higher learning are arguably the most savvy in the world when it comes to creating, measuring, analyzing, reporting on, and deriving world-changing results from data of all kinds. Sadly, this isn’t always the case when it comes to capturing and using donor data to create more personalized and effective fundraising campaigns.

Outsourcing  Gift Processing and Donor Data Capture

Fortunately institutions of higher learning can take a cue from other nonprofit and for profit institutions and consider outsourcing the challenges of gift processing and donor data capture to organizations with the skill and scale to do it more effectively and efficiently.

Recently CDS Global released a white paper filled with best practices on how institutions can raise more money with better data, how they can increase fundraising efficiency and accuracy, how to evaluate gift processing technology providers, and how to make the transition from status quo. And selfishly, I hope that it is downloaded and absorbed by all of the institutions of higher learning that my soon-to-be college bound daughter is considering. Reducing gift processing costs and increasing fundraising dollars probably won’t singlehandedly stop the increase in tuition costs, but it certainly is an easy way to help. And I’ll take whatever I can get!